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Niti Aayog -- new name of Planning Commission?

he replacement of the Planning Commission by Niti Aayog will help change the emphasis from projects and programmes to policy and institutions, from expenditure inputs to real outcomes through better governance, and from political disputation over incremental allocations to new challenges and opportunities

The “Yojana Aayog” or “Planning Commission” has been replaced by the “National Institution for Transforming India” or “NITI” for short. From “Yojana” to “Niti”, what is the difference? First and foremost, it means a sharp break from Soviet inspired National Development (Five Year) Plans to “Niti”, that is “Policy” and “Institutional change for ‘transforming India’.” Paragraph three of the Cabinet resolution states: we “require institutional reforms in governance and dynamic policy shifts that can seed and nurture large-scale change.”

“Development” is one of those words that everyone thinks they understand but which means many different things to different people. It covers a multitude of possibilities as well as a multitude of ideological sins and special agendas. The cabinet resolution constituting Niti Aayog approvingly quotes Mahatma Gandhi: “Constant development is the law of life, and a man who always tries to maintain his dogmas in order to appear consistent drives himself into a false position.” The Planning Commission took its first tentative steps towards “policy” 28 years ago, by creating a post of Advisor Development Policy. There was so much resistance that the Advisor (in this case, me) had to be designated “Advisor-Development Policy Research.” Despite decades of effort, policy solutions always played second fiddle to increasing Plan allocations and expenditures without any “social benefit-cost analysis” or “Macro-economic models” to back the decisions.

Three other points in the introductory part of the Cabinet resolution setting up Niti Aayog are noteworthy: The first is the assertion that “our aspirations have soared and today we seek elimination, rather than alleviation, of poverty.” The second is the important role given to governance in achieving desirable social outcomes: “The people of India have great expectations for progress and improvement in governance, through their participation. They require institutional reforms in governance and dynamic policy shifts that can seed and nurture large-scale change (paragraph 3).” Subsequently, there is an indication of how the institutional reforms in governance can be brought about: “Government and governance have to be conducted in an environment of total transparency — using technology to reduce opacity and thereby, the potential for misadventures in governing (paragraph 6g).”

Poverty elimination

A paper in the Economic and Political Weekly in 2002 had raised the issue of corruption and governance and to bring policy-institutional reform into the development debate, but to no avail. A debate on poverty elimination, as against alleviation, was sought to be initiated in 2005-06 through a Planning Commission paper, but was stymied. It is therefore very encouraging that this is an important part of the mandate of Niti Aayog.

“The emphasis on interaction with international think tanks and Indian educational and policy research institutions would be a departure for the Indian bureaucracy.”

The third is the recognition of a changed reality of economy, society and government functioning and its implications: “India needs an administration paradigm in which the government is an ‘enabler’ rather than a ‘provider of first and last resort’. The role of the government as a ‘player’ in the industrial and service sectors has to be reduced. Instead, the government has to focus on enabling legislation, policy-making and regulation (paragraph 6a).” Many old-style development planners refused to accept these changes (even if they paid lip service to it), though this issue was raised first in the 1990s and subsequently in the 2000s. A recognition of this reality by the Union cabinet provides a sound basis for closing the technology gap between India and the advanced countries, that is correlated with the large income gap between us. The reference to the role of urbanisation (paragraph 6g) as an aid to a technological catching up, suggests an understanding of the links between technology gaps and per capita income gaps. This further links to welfare gaps through the statement “Equality of opportunity goes hand-in-hand with an inclusiveness agenda (paragraph 8c).” The open discussion of the global environment and its two-way interaction with India also displays a degree of self-confidence vis-à-visforeign countries (paragraph 6c) that bodes well for building a competitive, fast-growing economy.

Niti’s role

So, what is the specific role of Niti Aayog in this changed environment? Its primary/central role is to “Serve as a Think Tank for the Government” … “to give “strategic and technical advice across the spectrum of key elements of policy. This includes matters of national and international import on the economic front, dissemination of best practices from within the country as well as from other nations, the infusion of new policy ideas and specific issue-based support.” (paragraph 11). Several of us have argued for a long time, without much success, that the old Planning Commission should evolve into a “think tank” with a primary emphasis on policy and institutions, rather than on expenditure programmes and projects. By its bold move to abolish the Yojana Aayog and set up Niti Aayog, the new government has set the stage for a wholesale transformation in this direction. Given the absence of any formal social benefit-cost analysis of programmes and projects and the limited capacity for an appraisal of outcomes, one had also suggested to the Deputy Chairman a decade ago that the Planning Commission develop a database of best practices to guide future decisions. It is hoped that a full-fledged division will be set up in Niti Aayog to translate this into reality, with all such information digitally accessible to experts and policymakers.

Emphasis on ‘lessons learnt’

Some of the specific objectives of Niti Aayog are at the level of generality of the Cabinet note, not significantly different from those of the Planning Commission or other organs of government. However, the following objectives suggest a greater priority and emphasis on the issues mentioned in them: To design strategic and long-term policy and programme frameworks and initiatives, and monitor their progress and their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements, including necessary midcourse corrections; to provide advice and encourage partnerships between key stakeholders and national and international like-minded think tanks, as well as educational and policy research institutions; to create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and other partners; to maintain a state-of-the-art resource centre, be a repository of research on good governance and best practices in sustainable and equitable development as well as help in their dissemination to stakeholders, and to focus on technology upgradation and capacity-building for implementation of programmes and initiatives

In the first of these, the emphasis on “lessons learnt” is very important. Experience confirms a great reluctance to modify or reject programmes when they don’t work. In the second, the emphasis on interaction with international think tanks and Indian educational and policy research institutions, though expected from a think tank for the government, would be a departure for the Indian bureaucracy. In the third, the emphasis on support systems rather than funds/subsidies is an important departure. The fourth reinforces what was said earlier about good governance and best practices and suggests that improvement in governance will be seriously pursued to improve the delivery of government social and welfare programmes. In the fifth, the recognition of weak capacity and need for “capacity building” for implementation is critical to the success of all new initiatives and many old ones.

The abolition of the Yojana Aayog and its replacement by Niti Aayog by the new government is a bold and long overdue initiative. It will help change the emphasis from projects and programmes to policy and institutions, from expenditure inputs to real outcomes through better governance and from political disputation over incremental allocations to new challenges and opportunities in a global environment. The discussion of India in a global context also reminds one of Gandhiji’s sayings: “Let the windows of my mind be open to winds from across the world, but let me not be blown away by them.” Like all new institutions, it will be a challenging job for Niti Aayog to fulfil its high objectives.

(Arvind Virmani is a former Chief Economic Advisor, Finance Ministry and Principal Advisor, Planning Commission who participated in most of the policy reforms of the 1990s and 2000s.)